Thursday, December 28, 2017
Court of Appeal:
Attorney for Collection Agency Liable for Shoddy Methods
Opinion Says Status as Lawyer Is No Defense to Action Brought Under Federal Fair Debt Collection Practices Act for Unauthorized Acts
By a MetNews Staff Writer
The Court of Appeal for this district has rejected the contention of an El Monte lawyer that he and his law firm were wrongfully found liable under the federal Fair Debt Collection Practices Act because they are not debt-collectors, but were merely providing legal representation to a collection agency.
Justice Lamar Baker of Div. Five wrote the unpublished opinion in Covarrubias v. Zee Law Group, B276577, filed Tuesday. It affirms a judgment granted by Los Angeles Superior Court Judge William D. Stewart following a bench trial in favor of the plaintiff against attorney Tappan Zee, Zee Law Group, and their client, Union Adjustment Co., Inc.
Zee’s actions took place in connection with an attempt to collect on a stipulated judgment which, when entered in 1997, was for $2,189.88. A judgment expires in 10 years if not renewed, and Zee effected a renewal in April 2007.
In July 2012, Zee caused an abstract of judgment to be filed against the home in Walnut, a city in East Los Angeles, belonging to Ignacio Covarrubias Sr. and his wife, Deborah Covarrubias. The problem was that the judgment debtor was their son, Ignacio Covarrubias Jr., who had used the home as his mailing address but had no financial interest in it.
Nature of Error
An attorney for the parents apprised Zee of the error. Whether it was the product of inadvertence or otherwise remains unclear, though it is known that in June 2012, Zee obtained a judge’s signature on an order adding the name of “Ignacio Covarrubias,” with no suffix, as a judgment debtor.
A 2014 opinion in the case, by Presiding Justice Paul A. Turner (since deceased), relates:
“Plaintiff’s counsel held a telephonic conference with Mr. Zee on November 30, 2012. Mr. Zee denied intending to record an abstract of judgment lien against plaintiff’s property. Mr. Zee claimed he would personally follow up with plaintiff’s real estate lender, the title company and the county recorder to correct the error.”
Nonetheless, Zee took no steps to remove the lien. Instead, he brought the lien to the attention of the lender, California Bank, where the parents had a line of credit, asking for a payoff on the judgment.
The bank responded by freezing the parents’ $25,000 line of credit, saying that Zee’s action had created an “adverse change” in their “financial condition,” constituting “an event of default” under the loan agreement.
Ignacio Covarrubias Sr. in March 2013 sued Zee, his law firm, and Union, under the federal Fair Debt Collection Practices Act (“FDCPA”), as well as for slander of title, abuse of process, and declaratory and injunctive relief.
Stewart denied an anti-SLAPP motion, but Div. Five, in Turner’s unpublished opinion on Aug. 12, 2014, reversed as to the causes of action for slander of title and abuse of process.
The opinion does not reflect the death of Ignacio Covarrubias Sr. on March 11, 2014. On remand, Stewart, on Nov. 21, 2014, granted a motion to substitute Deborah Covarrubias as plaintiff.
He granted judgment in her favor on July 21, 2016, based on the FDCPA’s prohibition on a “threat to take any action that cannot legally be taken” in collecting on a debt. Zee had threatened to cause a foreclosure on the Walnut property.
Stewart awarded the statutory maximum under the FDCPA: $1,000. Zee appealed; the widow did not appear.
In announcing the affirmance, Baker noted that “[i]n the absence of a transcript of the trial, we presume the trial court’s finding of liability is correct.” In a concurring opinion, Acting Presiding Justice Sandy Kriegler indicated that he views that factor as determinative.
With respect to liability of Zee and his firm, notwithstanding Zee’s protest that they are not debt collectors, Baker alluded to the U.S. Supreme Court’s 1995 opinion in Heintz v. Jenkins in which Justice Stephen Breyer declared that the FDCPA “applies to attorneys who ‘regularly’ engage in consumer debt collection activity, even when that activity consists of litigation.”
“At the risk of belaboring the point, the absence of a transcript of the trial means we presume sufficient evidence supports the trial court’s finding that Zee satisfies the FDCPA ‘debt collector’ definition….Indeed, the trial court’s written findings of fact indicate Zee engaged in various activities that showed he prioritized the recovery of debt over his responsibilities as an attorney.”
The jurist said that the client’s contention that it was not a debt collector because it was the judgment creditor, not seeking to collect someone else’s debt, “does not carry the day” because it had purchased the judgment. He termed “meritless” the defendants’ contention that the parents could not sue under the FDCPA because they were not “consumers,” setting forth that the act does not limit redress to consumers and that, in any event, case law would confer upon them that status.
In his concurring opinion, Kriegler said:
“In my view, a sufficient response to the appeal is a summary affirmance due to the absence of a reporter’s transcript of trial.
“Appellants concede ‘a reporter’s transcript would be beneficial in reviewing the matter.’ They phrase the issues as whether the court’s ‘evidentiary conclusions’ were an abuse of discretion on the issue of whether Union is a debt collector and whether plaintiff met his burden of proof that Union was a debt collector. Because these issues are necessarily dependent on the facts, and we have no trial record, I would affirm on the basis the judgment is presumed correct and appellants have failed to carry their burden of establishing prejudicial error.”
The case is Covarrubias v. Zee Law Group, B276577.
Then-Gov. Arnold Schwarzenegger in 2010 appointed Zee to the State Board of Pharmacy.
A press release indicated that he had been managing attorney of Zee Law Group since 2001, had been a reserve deputy sheriff for the Los Angeles County Sheriff’s Department since 2003, and was a municipal commissioner for South Pasadena from 1989-94.
It was related that he was a member of the board of directors for the Los Angeles Chinese Chamber of Commerce and the Sheriff’s Support Council.
Public records show that he is also a licensed real estate broker.
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